Digital production agency’s international outsource model serves as a benchmark for local business

With the rapid advance of Internet technology and increasing smartphone penetration, ‘digital’ is fast becoming the buzzword in South African business circles. And as enterprises clamour to own a piece of the mobile and social media space, digital agencies are quickly springing forth to meet growing demands. But will local agencies remain sustainable once supply begins to outweigh demand in South Africa? According to Nick Durrant, Managing Director of Bluegrass Digital, one of the country’s original and most acclaimed digital production agencies, the key to on-going success lies in diversification.

“We’ve always taken a more global approach to business,” explains Durrant, who, along with his brother James, oversees Bluegrass Digital’s operations in both South Africa and the UK. “South African businesses understandably tend to keep their interests local, but with the rest of the world still recovering in the wake of recent recession, there are plentiful opportunities for local enterprises abroad.”

Established in 1996, Bluegrass Digital has successfully applied an inter-continental outsourced business model for almost two decades, servicing international clients out of its production hub in Cape Town. Whilst the company has worked extensively with locally based creative agencies to deliver cutting-edge digital solutions, the majority of its work has been generated beyond local borders.

“Approximately 72% of our business comes from clients based in the UK,” says Durrant. “There’s far less weariness from European clients these days about doing business in South Africa, and given the favourable exchange rate, as well as the high level of service delivery increasingly associated with local agencies, enterprises are now more open to the possibility of outsourcing digital production work to South Africa.”

Durrant lived in the UK for 15 years prior to setting up Bluegrass Digital in the mid-90’s, and consequently the British market seemed like a natural expansion point for the company, which opened the doors to its London office at the outset of the ‘dot com’ boom in 1999. And whilst experience abroad undoubtedly eased the transition into what is a fairly established market, Durrant believes that there is plenty of potential for local businesses offering superior service and eyeing out European expansion prospects.

“The key to establishing a presence in global markets lies in the creation of key channel partnerships,” explains Durrant. “We are essentially an agency for agencies, and offer our services as a value add for companies abroad without digital production capacity. If local enterprises work strategically to create relationships on the ground in other countries, they can quickly begin to diversify their interests and generate income in foreign currency.”

Whilst conquering markets like the UK might seem like a daunting prospect, particularly for small businesses with limited resources, there is no shortage of diversification opportunities closer to home. South Africa serves as a key strategic gateway to the rest of Africa, and with demand for digital services in countries like Nigeria, Ghana and Kenya currently at an all-time high, local agencies now have a real opportunity to establish themselves in these burgeoning markets.

“We’ve begun to apply the same outsourced business model to African markets, and have already enjoyed a lot of success, particularly in Nigeria,” says Durrant, who has worked on projects for major brands like Dettol and Standard Bank via a Nigerian-based communications company. “Conducting business in Africa can be fraught with cultural complexities, which makes it all the more important to have a trusted partner on the ground that can help to navigate the various roadblocks that inevitably emerge when expanding into new territories.”

With a lack of service delivery on the ground and a growing demand for world-class digital production services, many agencies in key West and East African countries are now looking abroad to meet their clients’ growing needs. Bluegrass Digital is currently working with the Silicon Cape initiative to set up a trade mission to Ghana for companies in the ICT and advertising industries, set to take place in August. The aim of the mission is to help small businesses to establish key strategic relationships in this West African territory, which has demonstrated significant digital growth over the past few years.

“Lucrative opportunities exist for local companies looking to expand their interests into Africa, and our aim is to assist them where possible in establishing key strategic relationships with agencies on the ground,” says Durrant. “With technological infrastructure rapidly improving in Africa, local agencies can now easily work with trusted partners in these territories without actually requiring any form of physical presence, making expansion a far more realistic prospect for a wider variety of businesses.”